Alex Ilchenko

The Landlord, Medallion Corporation, appealed the Trustee's disallowance of its unsecured claim for damages related to the unexpired portion of a commercial lease following the tenant's bankruptcy and the Trustee's disclaimer.

The court affirmed the long-standing Ontario legal principle that a trustee's disclaimer of a lease in bankruptcy is deemed a consensual surrender, which extinguishes the tenant's obligations and precludes the landlord from claiming unsecured damages for the unexpired term beyond the preferred claim under the Bankruptcy and Insolvency Act and Commercial Tenancies Act.

The appeal was dismissed.

The Monitor of Target Canada Co. and its affiliates, undergoing CCAA proceedings, sought advice and directions from the court regarding the treatment of several late-filed claims.

The court applied the four-part test from *Blue Range Resource Corp. Re*, considering inadvertence, good faith, and prejudice to other creditors.

The court found that five claimants (Fruits & Passion, Lou Pharma, Kulwinder Kaur Rai, Capital Brands Inc., and Mohammad Alam) satisfied the test, allowing their claims against Target Canada Co. However, claims against Target Corporation and Target Brands were barred due to the prejudice caused by disturbing the sanctioned plan and releases, which Target Corporation relied upon for its significant contributions.

The court also provided directions on distributions for allowed late claims and a framework for addressing future unknown late claims, emphasizing the finality of the sanctioned plan.

The court addressed a dispute between successive trustees in bankruptcy regarding the payment of fees in a no-asset estate.

The former proposal trustee, Dodick Landau Inc., opposed the motion by the substituted trustee, A. Farber & Partners Inc., for approval of its fees and discharge, arguing that Farber was required to pay Dodick Landau's fees under s. 36(2)(e) of the Bankruptcy and Insolvency Act.

The court held that funds received by Farber from a secured creditor's indemnity were not "funds available" to the estate for the purpose of paying the former trustee, as these were third-party funds and not estate assets.

Farber's motion was granted, and Dodick Landau's opposition was dismissed.

The Proposal Trustee sought court approval for the proposals of Wasaya Airways Leasing Ltd. (WALL) and the joint proposal of Wasaya Airways Limited Partnership (WALP) and Wasaya General Partner Limited (WGPL).

The court considered the appropriateness of a joint proposal for related corporations under the Bankruptcy and Insolvency Act (BIA), noting the lack of specific BIA provisions but relying on prior judicial interpretations.

The proposals, which offered unsecured creditors a better outcome than bankruptcy, were overwhelmingly approved by creditors.

The court found the proposals reasonable, beneficial to creditors, and made in good faith, also acknowledging the public interest in the debtors' essential services to remote First Nations communities.

Following a trial of issues under section 81 of the Bankruptcy and Insolvency Act regarding competing claims to property, the successful claimant sought costs against the unsuccessful claimant, and the unsuccessful claimant sought costs against the Trustee.

The court awarded partial indemnity costs to the successful claimant, finding no litigation conduct warranting elevated costs.

The unsuccessful claimant's request for costs against the Trustee was denied because its own contradictory and incomplete positions necessitated the Trustee seeking the court's directions.